Category: VRM (page 1 of 23)

A positive look at Me2B

Somehow Martin Geddes and I were both at PIE2017 in London a few days ago and missed each other. That bums me because nobody in tech is more thoughtful and deep than Martin, and it would have been great to see him there. Still, we have his excellent report on the conference, which I highly recommend.

The theme of the conference was #Me2B, a perfect synonym (or synotag) for both #VRM and #CustomerTech, and hugely gratifying for us at ProjectVRM. As Martin says in his report,

This conference is an important one, as it has not sold its soul to the identity harvesters, nor rejected commercialism for utopian social visions by excluding them. It brings together the different parts and players, accepts the imperfection of our present reality, and celebrates the genuine progress being made.

Another pull-quote:

…if Facebook (and other identity harvesting companies) performed the same surveillance and stalking actions in the physical world as they do online, there would be riots. How dare you do that to my children, family and friends!

On the other hand, there are many people working to empower the “buy side”, helping people to make better decisions. Rather than identity harvesting, they perform “identity projection”, augmenting the power of the individual over the system of choice around them.

The main demand side commercial opportunity at the moment are applications like price comparison shopping. In the not too distant future is may transform how we eat, and drive a “food as medicine” model, paid for by life insurers to reduce claims.

The core issue is “who is my data empowering, and to what ends?”. If it is personal data, then there needs to be only one ultimate answer: it must empower you, and to your own benefit (where that is a legitimate intent, i.e. not fraud). Anything else is a tyranny to be avoided.

The good news is that these apparently unreconcilable views and systems can find a middle ground. There are technologies being built that allow for every party to win: the user, the merchant, and the identity broker. That these appear to be gaining ground, and removing the friction from the “identity supply chain”, is room for optimism.

Encouraging technologies that enable the individual to win is what ProjectVRM is all about. Same goes for Customer Commons, our nonprofit spin-off. Nice to know others (especially ones as smart and observant as Martin) see them gaining ground.

Martin also writes,

It is not merely for suppliers in the digital identity and personal information supply chain. Any enterprise can aspire to deliver a smart customer journey using smart contracts powered by personal information. All enterprises can deliver a better experience by helping customers to make better choices.

True.

The only problem with companies delivering better experiences by themselves is that every one of them is doing it differently, often using the same back-end SaaS systems (e.g. from Salesforce, Oracle, IBM, et. al.).

We need ways customers can have their own standard ways to change personal data settings (e.g. name, address, credit card info), call for support and supply useful intelligence to any of the companies they deal with, and to do any of those in one move.

See, just as companies need scale across all the customers they deal with, customers need scale across all the companies they deal with. I visit the possibilities for that here, here, here, and here.

On the topic of privacy, here’s a bonus link.

And, since Martin takes a very useful identity angle in his report, I invite him to come to the next Internet Identity Workshop, which Phil Windley, Kaliya @IdentityWoman and I put on twice a year at the Computer History Museum. The next, our 26th, is 3-5 April 2018.

 

 

How should customers look to business?

The world of business has a default symbol for customers: the ones they put on restroom doors.

Outside of those, there is no universal symbol for a customer.

When business talks to itself, it mostly uses generic cartoon images such as these (from a Bing search) and these (from a Google one):

I’m sure all of us identify more with the restroom symbols (and emojis) than we do with those things.

It’s interesting how, even though we comprise 100% of the marketplace, we remain a prevailing absence in nearly every business conference, business book and business school class.

The notion that customers can be independent and fully empowered agents of themselves, with scale across all the businesses they deal with, at best gets the intellectual treatment (seeing customers, for example, as “rational actors”).

At worst, customers are seen as creatures that go moo and squit money if they’re held captive and squeezed the right ways.  Listen to the talk. Typically customers are “targets” that businesses “acquire,” “manage,” “control” or “lock in” as if we are cattle or slaves.

Often customers are simply ignored.

One example that showed up today was this press release announcing “an innovative initiative focused on the overhaul of open account trade finance infrastructure.” It’s from R3, which makes Corda, a ” distributed ledger platform designed specifically for financial services,” and is “a joint undertaking between R3, TradeIX, and twelve financial institutions.” This network, says the release, will “improve access to open account trade for the global ecosystem of banks, buyers, suppliers, technology providers, insurers, and other parties, such as logistics companies, that are critical to facilitating global open account trade flows.”

Never mind that distributed ledgers have been hailed as the second coming (or even the first) of the customer-empowering peer-to-peer world. Instead note the absence of customers: people and institutions who entrust their money and assets to all the parties listed in that long sentence.

Our goal with ProjectVRM is to equip customers (not just “consumers,” or “end users”) to say We’re not just at the same table with you guys. We are that table. And we are much bigger and far more powerful than you can ever make us on your own.

In other words, our job here is to give customers superpowers.

There are lots of people arguing that more policy is the answer. But we already have the GDPR. Huge leverage there. Let’s use it to highlight how own customer-empowering solutions put the companies that serve us in compliance.

In the last post we named one. That and many other forms of #customertech will be featured at VRM Day and IIW, later this month at the Computer History Museum in Silicon Valley. Looking forward to seeing many of you there.

Let’s make customers powerful. Then it won’t matter how they look to business, other than real.

 

Good news for publishers and advertisers fearing the GDPR

The GDPR (General Data Protection Regulation) is the world’s most heavily weaponized law protecting personal privacy. It is aimed at companies that track people without asking, and its ordnance includes fines of up to 4% of worldwide revenues over the prior year.

The law’s purpose is to blow away the (mostly US-based) surveillance economy, especially tracking-based “adtech,” which supports most commercial publishing online.

The deadline for compliance is 25 May 2018, just a couple hundred days from now.

There is no shortage of compliance advice online, much of it coming from the same suppliers that talked companies into harvesting lots of the “big data” that security guru Bruce Schneier calls a toxic asset. (Go to https://www.google.com/search?q=GDPR and see whose ads come up.)

There is, however, an easy and 100% GDPR-compliant way for publishers to continue running ads and for companies to continue advertising. All the publisher needs to do is agree with this request from readers:

That request, along with its legal and machine-readable expressions, will live here:

The agreements themselves can be recorded anywhere.

There is not an easier way for publishers and advertisers to avoid getting fined by the EU for violating the GDPR. Agreeing to exactly what readers request puts both in full compliance.

Some added PR for advertisers is running what I suggest they call #Safeds. If markets are conversations (as marketers have been yakking about since  The Cluetrain Manifesto), #SafeAds will be a great GDPR conversation for everyone to have:

Here are some #SafeAds benefits that will make great talking points, especially for publishers and advertisers:

  1. Unlike adtech, which tracks eyeballs off a publisher’s site and then shoot ads at those eyeballs anywhere they can be found (including the Web’s cheapest and shittiest sites), #SafeAds actually sponsor the publisher. They say “we value this publication and the readers it brings to us.”
  2. Unlike adtech, #SafeAds carry no operational overhead for the publisher and no cognitive overhead for readers—because there are no worries for either party about where an ad comes from or what it’s doing behind the scenes. There’s nothing tricky about it.
  3. Unlike adtech, #SafeAds carry no fraud or malware, because they can’t. They go straight from the publisher or its agency to the publication, avoiding the corrupt four-dimensional shell game adtech has become.
  4. #SafeAds carry full-power creative and economic signals, which adtech can’t do at all, for the reasons just listed. It’s no coincidence that nearly every major brand you can name was made by #SafeAds, while adtech has not produced a single one. In fact adtech has an ugly history of hurting brands by annoying people with advertising that is unwelcome, icky, or both.
  5. Perhaps best of all for publishers, advertisers will pay more for #SafeAds, because those ads are worth more.

#NoStalking and #SafeAds can also benefit social media platforms now in a world of wonder and hurt (example: this Zuckerberg hostage video). The easiest thing for them to do is go freemium, with little or no ads (and only safe ones on the paid side, and nothing but #SafeAds on the free side, in obedience to #NoStalking requests, whether expressed or not.

If you’re a publisher, an advertiser, a developer, an exile from the adtech world, or anybody else who wants to help out, talk to us. That deadline is a hard one, and it’s coming fast.

CustomerTech

doc-017-018_combined_med

We now have a better name for VRM than VRM: customertech.

Hashtag, #customertech.

We wouldn’t have it without adtech (3+million results), martech (1.85m) , fintech (22+m) and regtech (.6m), all of which became hot stuff in the years since we started ProjectVRM in 2006. Thanks to their popularity, customertech makes full sense of what VRM has always been about.

The term came to us from Iain Henderson, a fellow board member of Customer Commons, in response to my request for help prepping for a talk I was about to give at the Martech conference in San Francisco last Thursday. Among other hunks of good advice, Iain wrote “martech needs customertech.”

That nailed it.

So I vetted customertech in my talk, and it took. The audience in the huge ballroom was attentive and responsive.

The talk wasn’t recorded, but @xBarryLevine in Martech Today wrote up a very nice report on it, titled MarTech Conference: Doc Searls previews ‘customer tech’:The marketing writer/researcher has helped set up a ‘Customer Commons’ to provide some of the automated ‘contracts’ between customers and brands.

One problem we’ve had with VRM as a label is an aversion by VRM developers to using it, even as they participate in VRM gatherings and participate in our mailing list (of about 600 members). It doesn’t matter why.

It does matter that martech likes customertech, and understands it instantly. In conversations afterwards, martech folk spoke about it knowingly, without ever having encountered it before. It was like, “Of course, customertech: tech the customer has.”

I highly recommend to VRM developers that they take to it as well. I can’t think of anything that will help the cause more.

The word alone should also suggest a symbol or an illustration better than VRM ever did.

This doesn’t mean, by the way, that we are retiring VRM, since Vendor Relationship Management earned its Wikipedia entry (at that link), and is one of the most important things customertech can do.

Look at it this way: VRM is one of the many things customertech can do.

Meanwhile, a hat tip to Hugh MacLeod of Gapingvoid for the image above. He drew it for a project we both worked on, way back in ’04.

Our radical hack on the whole marketplace

In Disruption isn’t the whole VRM story, I visited the Tetrad of Media Effects, from Laws of Media: the New Science, by Marshall and Eric McLuhan. Every new medium (which can be anything from a stone arrowhead to a self-driving car), the McLuhans say, does four things, which they pose as questions that can have multiple answers, and they visualize this way:

tetrad-of-media-effects

The McLuhans also famously explained their work with this encompassing statement: We shape our tools and thereafter they shape us.

This can go for institutions, such as businesses, and whole marketplaces, as well as people. We saw that happen in a big way with contracts of adhesion: those one-sided non-agreements we click on every time we acquire a new login and password, so we can deal with yet another site or service online.

These were named in 1943 by the law professor Friedrich “Fritz” Kessler in his landmark paper, “Contracts of Adhesion: Some Thoughts about Freedom of Contract.” Here is pretty much his whole case, expressed in a tetrad:

contracts-of-adhesion

Contracts of adhesion were tools industry shaped, was in turn shaped by, and in turn shaped the whole marketplace.

But now we have the Internet, which by design gives everyone on it a place to stand, and, like Archimedes with his lever, move the world.

We are now developing that lever, in the form of terms any one of us can assert, as a first party, and the other side—the businesses we deal with—can agree to, automatically. Which they’ll do it because it’s good for them.

I describe our first two terms, both of which have potentials toward enormous changes, in two similar posts put up elsewhere: 

— What if businesses agreed to customers’ terms and conditions? 

— The only way customers come first

And we’ll work some of those terms this week, fittingly, at the Computer History Museum in Silicon Valley, starting tomorrow at VRM Day and then Tuesday through Thursday at the Internet Identity Workshop. I host the former and co-host the latter, our 24th. One is free and the other is cheap for a conference.

Here is what will come of our work:
personal-terms

Trust me: nothing you can do is more leveraged than helping make this happen.

See you there.

 

“Disruption” isn’t the whole VRM story

250px-mediatetrad-svg

The vast oeuvre of Marshall McLuhan contains a wonderful approach to understanding media called the tetrad (i.e. foursome) of media effects.  You can apply it to anything, from stone tools to robots. McLuhan unpacks it with four questions:

  1. What does the medium enhance?
  2. What does the medium make obsolete?
  3. What does the medium retrieve that had been obsolesced earlier?
  4. What does the medium reverse or flip into when pushed to extremes?

I suggest that VRM—

  1. Enhances CRM
  2. Obsoletes marketing guesswork, especially adtech
  3. Retrieves conversation
  4. Reverses or flips into the bazaar

Note that many answers are possible. That’s why McLuhan poses the tetrad as questions. Very clever and useful.

I bring this up for three reasons:

  1. The tetrad is also helpful for understanding every topic that starts with “disruption.” Because a new medium (or technology) does much more than just disrupt or obsolete an old one—yet not so much more that it can’t be understood inside a framework.
  2. The idea from the start with VRM has never been to disrupt or obsolete CRM, but rather to give it a hand to shake—and a way customers can pull it out of the morass of market-makers (especially adtech) that waste its time, talents and energies.
  3. After ten years of ProjectVRM, we still don’t have a single standardized base VRM medium (e.g. a protocol), even though we have by now hundreds of developers we call VRM in one way or another. Think of this missing medium as a single way, or set of ways, that VRM demand can interact with CRM supply, and give every customer scale across all the companies they deal with. We’ve needed that from the start. But perhaps, with this handy pedagogical tool, we can look thorugh one framework toward both the causes and effects of what we want to make happen.

I expect this framework to be useful at VRM Day (May 1 at the Computer History Museum) and at IIW on the three days that follow there.

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The distributed future is personal

The End of Cloud Computing, is a prophetic presentation by  Peter Levine, of Andreesen Horowitz, and required viewing by anyone interested in making the distributed future happen.

His key point: “We are returning to an edge-intelligence distributed computing model that’s absolutely thematic with the trends in computing moving from centralized out to distributed,” which he illustrates this way:

back-to-the-future

Later he adds, “We are absolutely going to return to a peer-to-peer computing model where the edge devices connect together creating a network of end point devices not unlike what we sort of saw in the original distributed computing model.” Here’s a graphic for that one:

sensor-data-explosion

I added the face in the middle, because the edge is individuals and not just the technology and data occupying their lives.

Joe Andrieu wrote about this a decade ago in his landmark post VRM: The user as point of integration.  An excerpt:

User Centrism as System Architecture

Doc Searls shared a story about his experience getting medical care while at Harvard recently. As a fellow at the Berkman center, he just gave them his Harvard ID card and was immediately ushered into a doctor’s office–minimal paperwork, maximal service. They even called him a cab to go to Mass General and gave him a voucher for the ride. At the hospital, they needed a bit more paperwork, but as everything was in order, they immediately fixed him up. It was excellent service.

But what Doc noticed was that at every point where some sort of paperwork was done, there were errors. His name was spelled wrong. They got the wrong birthdate. Wrong employer. Something. As he shuffled from Berkman to the clinic to the cabbie to the hospital to the pharmacy, a paper (and digital trail) followed him through archaic legacy systems with errors accumulating as he went. What became immediately clear to Doc was that for the files at the clinic, the voucher, the systems at the hospital, for all of these systems, he was the natural point of data integration… he was the only component gauranteed to contact each of these service providers. And yet, his physical person was essentially incidental to the entire data trail being created on his behalf.

User as Point of Integration

But what if those systems were replaced with a VRM approach? What if instead of individual, isolated IT departments and infrastructure, Doc, the user was the integrating agent in the system? That would not only assure that Doc had control over the propagation of his medical history, it would assure all of the service providers in the loop that, in fact, they had access to all of Doc’s medical history. All of his medications. All of his allergies. All of his past surgeries or treatments. His (potentially apocryphal) visits to new age homeopathic healers. His chiropractic treatments. His crazy new diet. All of these things could affect the judgment of the medical professionals charged with his care. And yet, trying to integrate all of those systems from the top down is not only a nightmare, it is a nightmare that apparently continues to fail despite massive federal efforts to re-invent medical care.

(See The Emergence of National Electronic Health Record Architectures in the United States and Australia: Models, Costs, and Questions and Difficulties Implementing an Electronic Medical Record for Diverse Healthcare Service Providers for excellent reviews of what is going on this area, both pro and con.)

Profoundly Different

Doc’s insight–and that of user-centric systems–isn’t new. What’s new is the possibility to utilize the user-centric Identity meta-system to securely and efficiently provide seamless access to user-managed data stores. With that critical piece coming into place, we have the opportunity to completely re-think what it means to build out our IT infrastructure.

Which brings us to Peter Levine’s final point, and slide:

entireworld-it

That world will be comprised of individuals operating with full agency, rather than as peripheral entities, and concerns, of centralized systems. Which is exactly what we’ve been fostering here at ProjectVRM from the start, ten years ago.

To obtain full agency, with control over the data and machine power suffusing our connected lives, we will need what’s been called first person or self-sovereign technologies. Not “personal power as a service” from some centralized system.

One immediate example is Adrian Gropper‘s Free Independent Health Records, which he’ll talk about on Thursday, January 26, at the Berkman Klein Center at Harvard University.  At that link: “Gropper’s research centers on self-sovereign technology for management of personal information both in control of the individual and as hosted or curated by others.”

For other efforts in the same direction, see our VRM Development Work page.

 

 

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Let’s give some @VRM help to the @CFPB

cfpbThe Consumer Financial Protection Bureau (@CFPB) is looking to help you help them—plus everybody else who uses financial services.

They explain:

Many new financial innovations rely on people choosing to give a company access to their digital financial records held by another company. If you’re using these kinds of services, we’d love to hear from you…

Make your voice heard. Share your comments on Facebook or Twitter . If you want to give us more details, you can share your story with us through our website. To see and respond to the full range of questions we’re interested in learning about, visit our formal Request for Information

For example,

Services that rely on consumers granting access to their financial records include:

  • Budgeting analysis and advice:  Some tools let people set budgets and analyze their spending activity.  The tools organize your purchases across multiple accounts into categories like food, health care, and entertainment so you can see trends. Some services send a text or email notification when a spending category is close to being over-budget.

  • Product recommendations: Some tools may make recommendations for new financial products based on your financial history. For example, if your records show that you have a lot of ATM fees, a tool might recommend other checking accounts with lower or no ATM fees.

  • Account verification: Many companies need you to verify your identity and bank account information. Access to your financial records can speed that process.

  • Loan applications: Some lenders may access your financial records to confirm your income and other information on your loan application.

  • Automatic or motivational savings: Some companies analyze your records to provide you with automatic savings programs and messages to keep you motivated to save.

  • Bill payment: Some services may collect your bills and help you organize your payments in a timely manner.

  • Fraud and identity theft protection: Some services analyze your records across various accounts to alert you about potentially fraudulent transactions.

  • Investment management: Some services use your account records to help you manage your investments.

A little more about the CFPB:

Our job is to put consumers first and help them take more control over their financial lives. We’re the one federal agency with the sole mission of protecting consumers in the financial marketplace. We want to make sure that consumer financial products and services are helping people rather than harming them.

A hat tip to @GeneKoo (an old Berkman Klein colleague) at the CFPB,  who sees our work with ProjectVRM as especially relevant to what they’re doing.  Of course, we agree. So let’s help them help us, and everybody else in the process.

Some additional links:

We’re done with Phase One

Here’s a picture that’s worth more than a thousand words:

maif-vrm

He’s with MAIF, the French insurance company, speaking at MyData 2016 in Helsinki, a little over a month ago. Here’s another:

sean-vrm

That’s Sean Bohan, head of our steering committee, expanding on what many people at the conference already knew.

I was there too, giving the morning keynote on Day 2:

cupfu1hxeaa4thh

It was an entirely new talk. Pretty good one too, especially since  I came up with it the night before.

See, by the end of Day 1, it was clear that pretty much everybody at the conference already knew how market power was shifting from centralized industries to distributed individuals and groups (including many inside centralized industries). It was also clear that most of the hundreds of people at the conference were also familiar with VRM as a market category. I didn’t need to talk about that stuff any more. At least not in Europe, where most of the VRM action is.

So, after a very long journey, we’re finally getting started.

In my own case, the journey began when I saw the Internet coming, back in the ’80s.  It was clear to me that the Net would change the world radically, once it allowed commercial activity to flow over its pipes. That floodgate opened on April 30, 1995. Not long after that, I joined the fray as an editor for Linux Journal (where I still am, by the way, more than 20 years later). Then, in 1999, I co-wrote The Cluetrain Manifesto, which delivered this “one clue” above its list of 95 Theses:

not

And then, one decade ago last month, I started ProjectVRM, because that clue wasn’t yet true. Our reach did not exceed the grasp of marketers in the world. If anything, the Net extended marketers’ grasp a lot more than it did ours. (Shoshana Zuboff says their grasp has metastacized into surveillance capitalism. ) In respect to Gibson’s Law, Cluetrain proclaimed an arrived future that was not yet distributed. Our job was to distribute it.

Which we have. And we can start to see results such as those above. So let’s call Phase One a done thing. And start thinking about Phase Two, whatever it will be.

To get that work rolling, here are a few summary facts about ProjectVRM and related efforts.

First, the project itself could hardly be more lightweight, at least administratively. It consists of:

Second, we have a spin-off: Customer Commons, which will do for personal terms of engagement (one each of us can assert online) what Creative Commons (another Berkman-Klein spinoff) did for copyright.

Third, we have a list of many dozens of developers, which seem to be concentrated in Europe and Australia/New Zealand.  Two reasons for that, both speculative:

  1. Privacy. The concept is much more highly sensitive and evolved in Europe than in the U.S. The reason we most often get goes, “Some of our governments once kept detailed records of people, and those records were used to track down and kill many of them.” There are also more evolved laws respecting privacy. In Australia there have been privacy laws for several years requiring those collecting data about individuals to make it available to them, in forms the individual specifies. And in Europe there is the General Data Protection Regulation, which will impose severe penalties for unwelcome data gathering from individuals, starting in 2018.
  2. Enlightened investment. Meaning investors who want a startup to make a positive difference in the world, and not just give them a unicorn to ride out some exit. (Which seems to have become the default model in the U.S., especially Silicon Valley.)

What we lack is research. And by we I mean the world, and not just ProjectVRM.

Research is normally the first duty of a project at the Berkman Klein Center, which is chartered as a research organization. Research was ProjectVRM’s last duty, however, because we had nothing to research at first. Or, frankly, until now. That’s why we were defined as a development & research project rather than the reverse.

Where and how research on VRM and related efforts happens is a wide open question. What matters is that it needs to be done, starting soon, while the “before” state still prevails in most of the world, and the future is still on its way in delivery trucks. Who does that research matters far less than the research itself.

So we are poised at a transitional point now. Let the conversations about Phase Two commence.

 

 

 

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What small businesses and their customers have in common

small vs largeSmall businesses and their customers both have problems dealing with big businesses that are more vested in captive markets than in free ones. So, since VRM is about independence and engagement, we may have an opportunity for customers and small businesses to join in common cause.

To dig deeper into that possibility, I interviewed LaVonne Reimer, who runs Lumenous (a startup that  provides ways for small businesses to create and share credit profiles on their own terms). Here goes—

DS: How big is small business?

LR: The domestic small business market in the U.S. is currently at 28 million firms. This includes employer and non-employer firms that provide products or services to their neighborhoods and communities as well as those that provide a unique offering to a larger supply chain or marketplace.

The impact of credit decisions is another big number—how at least $4 trillion flows to small business in the U.S.. That includes a significant portion of over $1 trillion in federal contracts and grants, and $700 billion in loans, a substantial portion of which are backed by the Small Business Administration (SBA).

DS: What’s the biggest issue for small business, and how is that similar to issues for individuals?

LR: Credit. The $28 billion credit industry provides creditworthiness indicators as well as personal identity and entity verification for both businesses and individuals. From the standpoint of both, that industry is a collection of black boxes. They are unaccountable collections of algorithms that can make or break a business, or often its owner, without explaining why. Or even knowing why.

The incumbent with the biggest impact on small business credit is Dun & Bradstreet. Founded in 1841, D&B is the grandfather of all credit bureaus and in many respects the originator of corporate surveillance.  And now D&B is in the identity business as well, putting those being identified at D&B’s mercy.

DS: How?

LR: Through the Data Universal Numbering System, better known as DUNS. It’s a loss leader that gives D&B a potent tool for finding and extracting information from business owners not otherwise publicly available. And it’s all done out of the sight of the business, and—effectively—government as well.

DS: Are they alone at this?

LR: No. A handful of venture-backed “fintech” startups are using similar technology to harvest data. Some of the data gathering might be initially authorized by the business owner. Other data they can scrape or mine from the Web to determine creditworthiness for purposes of making loans. Many do not disclose “effective APR” but recent Federal Reserve System research suggests the range may be from over 50% at the low end to somewhere in the hundreds. Business owners may get loans they couldn’t get from regulated or traditional banks but are blind-sided by onerous terms and in some cases thrown into bankruptcy because the collection model—daily automated micro-payments—catches them off guard, for example by triggering excessive non-sufficient funds (NSF) fees. To a business owner, these providers seem much like credit bureaus. There is no way yet to leverage or re-use the data you have to supply to get the loan, much less understand how the algorithms work.

I should add that a small business “bill of rights” has been circulating among start-ups; but it under-estimates the degree to which the odds are stacked against a small business across commercial credit.”

DS: What about government oversight?

LR: Today, consumer identity and credit providers must comply with the Fair Credit Reporting Act, but the FCRA and similar regulations do not govern small business credit, not even when consumer credit information is used to verify the identity and creditworthiness of the entity and owner.

There is, however, increasing scrutiny by the Federal Trade Commission (FTC) of big data systems in credit profiling and other data brokers. In multiple enforcement orders and two major reports, the FTC is calling on identity and data providers to demonstrate greater transparency and accountability in the uses of personal data. One report is Big Data: A Tool for Inclusion or Exclusion? The other is “Data Brokers: A Call for Transparency and Accountability.

Still, as is true of the Fair Credit Reporting Act, small business is left unaddressed, even if creditors use consumer credit information associated with the owner of the business.

DS: What outcomes are we looking for here?

LR:  At Lumenous, we are applying the principles of VRM to transform the relationship between small business and creditors. As a result, up to six million small employer firms will be able to access the credit, capital, and commerce they deserve.. This will lead to better leverage of cash and ability to not only meet payroll and pay bills on time, but also better contribute to the economic well-being of their communities. Twenty-two million “non employer firms”—freelancers and sole proprietors, for example—will have access to credit, and more easily form trusted joint ventures to bid on otherwise out-of-reach projects.

DS: Are there any large companies that are working to bring small business and their customers together in the fight to improve the economy from the bottom up?

LR: I really like what Xero is doing. It is far more friendly and useful to small business than other accounting software and services companies (especially Quickbooks). It’s growing rapidly too. I believe that;s because it has a deep understanding of how small business works, and a genuine respect for how small business owners think about their firms, and those firms’ roles in the world.

DS: I noticed. Xero’s CEO, Rod Drury, sourced a recent post of mine in a talk he gave just a few days ago. And Gary Turner, an old friend from my Cluetrain days, is Managing Director of Xero in the UK. I’ll be talking with both in the next few days as well.

LR: I expect that Xero will also have lots of useful intelligence about what’s actually happening with small business, worldwide—and with possible VRM connections.

And here are some bonus sources, mostly courtesy of LaVonne:

There are many more, but I’ll save those for a follow-up post.

 

 

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